(Adds close of U.S. markets)
* FOMC minutes show U.S. rate hike dependent on improving economy
* Wall St closes mostly flat after see-saw session
* Oil retreats after OPEC reports output at 8-year high
* Dollar gains on Fed minutes speculation
By Herbert Lash
NEW YORK, Oct 12 (Reuters) - Global equity markets remained slightly lower and the dollar a bit higher on Wednesday after minutes from a meeting of Federal Reserve policymakers last month indicated they might raise interest rates if the U.S. economy continued to strengthen.
Market reaction was muted as there was little revelatory in the minutes from the Sept. 20-21 meeting, with policymakers divided on how much longer they should allow the labor market and inflation to improve before lifting rates.
Oil prices fell 1 percent after the Organization of the Petroleum Exporting Countries reported its output hit an eight-year high in September, offsetting optimism over the group’s pledge to bring a global crude glut under control.
Sterling rebounded from a brutal selloff since last week as British Prime Minister Theresa May’s offer to give UK lawmakers a say in plans to leave the European Union calmed fears of a “hard Brexit” - an all-out clear break from the single market.
U.S. equity markets rose before the release of the Federal Open Market Committee’s minutes and closed flat after a narrow, see-saw session. European markets and an index of global equity performance traded lower.
Quincy Krosby, market strategist at Prudential Financial, said the Dec. 13-14 FOMC meeting will show whether Fed Chair Janet Yellen goes through with a rate hike she has been telegraphing since August.
“We remain where we were: a market still betting Chair Yellen wants a hike in December,” Krosby said.
The Dow Jones industrial average closed up 15.54 points, or 0.09 percent, to 18,144.2. The S&P 500 gained 2.44 points, or 0.11 percent, to 2,139.17 and the Nasdaq Composite lost 7.77 points, or 0.15 percent, to 5,239.02.
In Europe, the FTSEurofirst 300 index of leading regional companies closed down 0.45 percent to 1,336.17. MSCI’s all-country world equity index fell 0.29 percent.
The dollar index, which measures the greenback against a basket of six major trading currencies, hit a seven-month high at 98.043 ahead of the FOMC minutes. It later traded up 0.24 percent at 97.921.
“A December increase is still likely, perhaps for no better reason than to save face for the FOMC members,” Chris Gaffney, president of world markets at EverBank, said
However, recent economic data does not indicate the case for raising rates has strengthened, Gaffney said.
The euro hit an 11-week low of $1.1005 in early U.S. trading, and was last down 0.34 percent at $1.1015. The dollar was last up 0.70 percent against the yen at 104.22 yen.
U.S. Treasury yields rose to their highest levels in four months, with prices pressured by two auctions and growing expectations of a Fed rate hike this year.
Yields on shorter-dated maturities, such as 2-year notes, which are more sensitive to Fed policy expectations, rose to their highest since early June ahead of the Fed minutes. Two-year notes were last up slightly in price to yield 0.8625 percent.
Benchmark 10-year Treasury notes were last down 4/32 in price to yield 1.7745 percent, with yields earlier rising above 1.80 percent for the first time since June 3.
Brent crude fell 60 cents to settle at $51.81 a barrel, while U.S. West Texas Intermediate crude slipped 61 cents to settle at $50.18 a barrel.
Reporting by Herbert Lash, additional reporting by Sam Forgione and Dion Rabouin in New York; Editing by Meredith Mazzilli